Issue 1: Was there a jurisdictional issue in the adjudication?
Issue 2: Was Mr Davies entitled to decline jurisdiction and resign in consequence?
The contract was in the names of SWS and Ms Patel. There was no mention of BIL. The wasted and endless arguments by SWS as to why BIL was a contracting party were unsustainable. Mr Davies was entitled to conclude there was a jurisdictional issue. If a defendant can demonstrate a reasonably arguable case that either he or the claimant were not a party to the construction contract, the adjudicator had no jurisdiction to make any decision, and it would not be enforced[8]. It was always open to BIL expressly to indicate that, although they were not a party to the contract, they accepted the ad-hoc jurisdiction of Mr Davies as the adjudicator (per Nordot[9] ) and/or that they waived any right to take a jurisdictional point subsequently. However, they did neither. An argument as to waiver was never put to Mr Davies and it was not for him to speculate what might happen at enforcement and whether an argument of waiver might succeed down the line. In the court’s view, Mr Davies was entitled to conclude that BIL were not a party to the contract; to take into account the fact that the parties had not satisfactorily answered his questions on that topic; to take into account BIL's previous technical objection to his jurisdiction and SWS' current objection to the counterclaim on another jurisdictional ground; and to take into account the absence of any unqualified acceptance of his jurisdiction by BIL on an ad hoc basis. He did not need to go further and estimate SWS' possible chances of success on enforcement, and base his decision on whether to continue with the adjudication on that estimation.
The judge had concluded that Mr Davies had stepped outside paragraph 13 of the Scheme in his reasons for deciding to resign. He felt there was no dispute between the parties about jurisdiction and his decision was therefore erroneous. However this error was not serious or material as he had the power to resign in any event.
This issue was one of fact not law.
First, the adjudicator an unqualified right to resign in any event pursuant to paragraph 9(1) of the Scheme and paragraph 31 of the MAP. Neither required good cause. But both were silent as to entitlement to fees. In those circumstances the entitlement to fees might rest on two matters: why they resigned and the terms of the appointment. As to the first, the court felt the adjudicator had good cause to resign. It could not sensibly be suggested that, where there was a real jurisdictional issue going to the viability of the entire adjudication, which the adjudicator spotted, the adjudicator should say nothing about it, and instead proceed solemnly to the end of the process, leaving the point to any disputed at an enforcement hearing. That was not the law and would be contrary to common sense. Paragraph 13 of the Scheme gave Mr Davies the express power to consider and raise with the parties a point which they had not raised but which he thought was important in order to determine the dispute. The same answer was dictated by practical common sense. As Coulson LH put it: “It would strike at the heart of an efficient system of adjudication and adjudication enforcement if adjudicators were encouraged to believe that they must stay silent when they spot a potential jurisdictional problem, and wait for the parties to raise it before considering it themselves.”
In the absence of proper assistance from the parties, it was not a matter for him.
[8] Thomas-Frederic's (Construction) Limited v Keith Wilson [2003] EWCA Civ 1494; [2004] BLR 23. [9] Nordot Engineering v Siemens 14 April 2000; Cill Sept. 2001
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